Design Thinking and Business Model Innovation

Liu, Rebecca and Mannhardt, Luca (2019) Design Thinking and Business Model Innovation. In: 26TH IPDMC: INNOVATION AND PRODUCT DEVELOPMENT MANAGEMENT CONFERENCE, 2019-06-09 - 2019-09-11.

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Abstract

This empirical study explores how design thinking is applied for business model innovation in firms. Today, business model innovation is no longer a theoretical concept but is increasingly becoming a decisive business practice in many firms (Damanpour, 1990; Gassmann, et al., 2014). And yet, failures in business model innovation are frequently reported (see e.g. Christensen, et al., 2016). To this end, prior studies (e.g. Brown, 2009; Jenkins & Fife, 2014) suggest that the application of design thinking may play a crucial role in developing business model innovation in firms. Yet, we know limited of firms’ practices upon this endeavour (Hassi & Laakso, 2011; Johansson-Sköldberg, et al., 2013). This is the point of departure in our paper. To address this issue, we employ qualitative research that allows us to surface the complexity embedded in firms’ practices. A research framework (Figure 1) is constructed from the literature. In short, we investigate different business model dimensions (value proposition, value chain, customer and profit mechanism) in different phases of the business model innovation process (initiation, ideation, integration and implementation). Data are collected from six case studies in the original equipment manufacturers (OEMs) of the automotive industry. In studying business model innovation, automotive OEMs are deemed to be important and appropriate as many of them are frequently required to renew their business models in order to be able to compete in the markets. To increase the validity of this study, the informants in each case studies are carefully selected based on their experience, knowledge and engagement in design thinking and business model innovation. To ensure the soundness of our study, we use content analysis (Gläser & Laudel, Experteninterviews und qualitative Inhaltsanalyse, 2010) and cognitive mapping (Miles, et al., 2014) to analyse a huge amount of data. In general, our data suggest that, in the business model innovation developing process, the application of design thinking contributes more to the ideation (Brown & Wyatt, 2010; Bonakdar & Gassmann, 2016) and integration (Brown & Wyatt, 2010; Hassi & Laakso, 2011) phases than the initiation and implementation ones. Interestingly, our data indicate that some practitioners seem to ignore the predictability and linearity in the design thinking process, which can be risky or even harmful to companies in the initiation and implementation phase. Furthermore, our data suggest firms well apply design thinking to re-define their value proposition (Liedtka, 2011; Tschimmel, 2012) and to manage customer equity in an innovative way (Brown, 2008; Brenner, et al., 2016; Liedtka, 2011). We however do not find the same degree of application upon the innovation in the mechanisms for profit and value chain improvement. Finally, our data indicate the critical role of corporate culture and its influence towards the effectiveness of the design thinking application (Martin, 2007; Schmiedgen, et al., 2015) on business model innovation (Frankenberger, et al., 2013). Our paper concludes with three major propositions for further investigation together with its theoretical and managerial contributions.